Canadian Dollar Gains Ground as USD/CAD Falls Below Key Level
The Canadian Dollar has strengthened over the weekend, pulling the USD/CAD exchange rate down to around 1.3940 after another soft session for the US Dollar.
According to Scotiabank, the underlying picture has improved enough to justify a mildly stronger CAD bias, with factors driving the CAD leaning slightly more positive. The bank's fair value estimate for spot is just below 1.40, currently at 1.3994.
The market has built a sizeable bearish CAD position, but Scotiabank notes that sentiment may be exposed to a reversal in the event of a CAD-positive or USD-negative shock.
The bank's technical view remains bearish, with no change in the CAD's technical position. The immediate area to watch is 1.3970/80, and Scotiabank recommends fading rallies rather than chasing the Dollar higher.